Blue Star Ltd is looking to make the first phase of its ₹220-crore air-conditioner plant in Sri City, Andhra Pradesh, by December 2019.
The first phase will see the rollout of 200,000 room AC units annually. Another 400,000 units will be added in two more phases of 200,000 each. The plant will be a fully backward integrated one with better connectivity that will help Blue Star bring down various costs, including freight.
According to B Thiagarajan, Joint Managing Director, Blue Star was initially looking to set up two plants — one in Jammu and Kashmir and another in Sri City. However, it may drop its J&K plans if the proposed concessions for setting up manufacturing units in hill States are not extended to it. It had obtained land for the plant from the J&K government in 2016 on a 99-year lease.
“We have written to the Jammu and Kashmir government and will wait till March 31. In case Jammu does not work out, we will set up a larger facility in Sri City,” he said on the sidelines of a recent event here.
Blue Star’s current AC making facility in Himachal Pradesh has a capacity of 550,000 units per annum. Nearly a third of the company’s annual revenues of ₹4,400 crore come from room ACs.
The room AC market in India is pegged at ₹12,500 crore, with companies like Voltas, LG, Samsung and Blue Star being the predominant players.
Other verticals
According to Thiagarajan, apart from room ACs, commercial refrigeration products and water purifiers will be the other big bets for the company in the coming days. While commercial refrigeration is currently a ₹600-crore business for Blue Star, it is expected to double to ₹1,200 crore by 2020. The increasing use of refrigeration units in mom & pop stores is one of the prime drivers for the segment.
In water purifiers, one of the recently added verticals, Blue Star expects revenues to the tune of ₹300 crore by 2020. It is targeting the mass segment with its ₹10,000-16,000 offerings. The commercial water purification segment — with new launches from next month — will be another target market.
Air purifiers — both residential and commercial — are expected to take some time to pick up, but Thiagarajan expects the segment to clock around ₹180 crore by 2020.